Strong second half boosts Spanish market

Spanish private equity investment declined 22 per cent to under E1bn in 2002, although a recovery in the second half spared the market a more dramatic decline.

Tipped as a growth market in 2003, Spain’s private equity market reported a buoyant end to the year, according to figures published by ASCRI (the Spanish venture capital association) and the Universidad Complutense de Madrid.


In 2002, E932m was invested in Spanish enterprises, down 22 per cent on the previous year. However, investment in the second half was 76 per cent higher than in the first six months of the year, and 2.4 per cent higher year-on-year. In 2001, Spanish investment fell by only four per cent, against a European fall of 30 per cent.


The majority of capital (62 per cent) went to expansion capital investments, with buyouts and venture capital investments accounting for 24 per cent and eleven per cent respectively. The mid-market was the main source of deal flow, with companies with a workforce of between 20 and 99 employees accounting for 31 per cent of all capital investment.


Two of the year’s biggest transactions came courtesy of CVC Capital Partners, including the E180m acquisition of Supermercados El Árbol in October 2002. CVC’s E577m acquisition of Iberdrola, the Spanish high-voltage cable network, is yet to complete. On the whole, consumer products proved to be the most resilient sector, accounting for a quarter of all deals completed, followed by chemicals and plastics.


Fundraising during 2002 fell by 40 per cent to E650m. The report estimates that Spanish firms have around E1.5bn available to invest, although ongoing fundraisings by a number of houses including MCH Private Equity and NMás will add to this total.


Several of Europe’s largest private equity houses set up shop in Spain last year in anticipation of activity picking up going forward. Sponsors Candover, Duke Street Capital and Advent International all established offices in Madrid. Debt provider Royal Bank of Scotland also recently opened an office in the Spanish capital. Credit Lyonnais announced that it was to resurrect its leveraged finance operation in Spain, following the departure of division head José-Maria Vegas to ICG last year.


A number of transactions look set to complete in 2003, including the privatisation of toll motorway operator Empresa Nacional de Autopistas (ENA) in a deal that could net between E1.2bn and E1.5bn for the government. Apax Partners is among the frontrunners for the business, although the government is thought to favour a trade sale.